“There Are Two Currencies For Advertising - Cash And Treaties; We’re Not Buying To Sell” - S. Sivakumar, CEO Designate, Times Private Treaties

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Bennett & Coleman & Co Ltd (BCCL), the largest media group in India, is considered a pioneer of the Private Treaties model, taking equity in ventures in exchange for advertising inventory. The Times Private Treaties Portfolio has between 175-200 companies, some of them listed on the bourses. The apparent success of this model has led other media companies, including HT Media, Network18, NDTV, Dainik Bhaskar and Dainik Jagran to set up their own Private Treaties division.

However, some questions have been raised about whether editorial content is a part of the Treaties deal; Sucheta Dalal had quoted an email from Economic Times editor Rahul Joshi, which mentions editorial “support” to treaties clients. There is also the issue of BCCL bloating valuations of companies, and investing in several companies in the same segment. In a candid interview with Medianama.com, S. Sivakumar, Principal Secretary and CEO Designate of Times Private Treaties, spoke about these issues, and outlined the investment philosophy behind the Private Treaties model.

Read the entire transcript here.

Excerpts from the 34 minute long interview:

On Valuation Of Deals
We don’t have to value the deal, because…there’s a rate card for each of our media vehicles, and he (the entrepreneur) makes a plan - over the next 3-5 years - because brand building is a long term initiative. We have media planners and advertising and branding promotions as value-add - who support by defining target group, SEC, make an assessment and make out a plan. That determines the deal size. A cash client pays in the space of 60 days. In case of a treaty client, I hope to get the payment when the company gets listed. It’s an event that has at least a 3 year time-span. This (Treaties) actually helps an entrepreneur leverage the strength of BCCL without straining his balance sheet from a cash-flow point of view.

On Bloated Valuations
Essentially it is the company that expects the next round to come at a similar view on valuation. The onus is clearly on the entrepreneur.

On Value, Competitive Advantage (And Lack Of)
Q. Let me take the example of Travel space, where you have invested in TravelMasti, TravelChacha, Ezeego1, TravelGuru and HolidayIQ. Where is the competitive advantage established by you since they’re competing with each other?
Very good point. Actually it’s very simple: the whole purpose of advertising is to bring out differentiation. For each of them there is a clear differentiation. For TravelGuru, his whole USP is the strength in the hotel space. Each one has a differentiation. To a layman, everything appears the same. That USP is brought out through the use of a powerful medium as ours.
Q. So you’re giving them space, and how they use the space is their problem?
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